RELEASE:

San Francisco and Palo Alto, CA, Feb. 9, 2007 – Powerset, the natural language search company, and Palo Alto Research Center, Inc. (PARC), a wholly owned subsidiary of Xerox Corporation, today announced an exclusive licensing relationship and collaboration agreement to develop and commercialize consumer search technology. The two innovators have joined forces to enable Powerset to bring unprecedented consumer search capabilities to the global market, leveraging more than three decades of PARC’s groundbreaking scientific research and technology refinement in natural language understanding. The partnership between Powerset and PARC includes a technology licensing agreement, patent licenses and a long-term collaboration agreement. In exchange for its contribution of technology, PARC will receive research funding, royalties and an equity stake in Powerset.

Distinctly different from the current, non-linguistic search processing models in use, natural language search uses ordinary, familiar phrases and sentences, not “computerese.” This approach typically leads to more accurate and effective search results.

“Today’s popular search engines are limited in terms of functionality and interaction with the user. Natural language represents the future of search, and the new paradigm in human-information interaction,” commented Mark Bernstein, PARC President and Center Director. “The challenge to process and understand natural language has required many years to address, as technology has evolved to enable new capabilities. We’re pleased to work closely with the exceptional team at Powerset to bring this capability to search. Powerset’s leadership and engineering expertise are key assets in helping to deliver this technology to consumers.”

Barney Pell, co-founder and CEO of Powerset, and company co-founder Lorenzo Thione provided the vision as to how PARC’s technology could be leveraged in large-scale search. Accordingly, the company has been working with PARC since 2005 to further develop the market opportunity. “Our collaboration with PARC results in remarkable new search capabilities that will turn the current statistical search model on its head,” Dr. Pell said. “We are also extremely pleased to bring Ron Kaplan on board as our CTO. He’s an esteemed voice within the computational linguistics community, and we’re glad he’s chosen to become an integral part of our team.”

”The time is right to tell the world about the game-changing technology we’ve created,” said Ron Kaplan, Powerset Chief Technology and Science Officer, who previously created and managed the Natural Language Research Group at PARC. ”I am glad to join Powerset’s team of world-class linguists and search engineers to help this technology revolutionize the way people access information.”

Steve Newcomb, co-founder and COO of Powerset, was the chief negotiator of the PARC License for Powerset. “Completing the commercialization and collaboration partnership with PARC represents an important milestone for Powerset as a company,” he commented. “Now that it‘s complete, Powerset has a unique breakthrough natural language technology, a partnership with a world-class research organization and a competitive position that we will leverage within the search industry and beyond.”

"In technology, there are incremental changes and there are breakthroughs,” commented Powerset investor Charles Moldow, a general partner with Foundation Capital. “We fully believe the world-class team at Powerset is set to show the world a breakthrough, and not limited to the search arena. We expect Powerset to fundamentally alter how people interact with their computing devices.”

About PARC PARC partners with both global organizations and with promising start-ups to discover and commercialize breakthrough technology and business concepts that solve real needs, and transform how enterprises deliver value to customers. PARC’s physical, computer, biological, and social scientists take an agile, cross-disciplinary approach to innovation, with the vision, expertise, and instinct to convert scientific findings into industrial-strength prototypes. Founded in 1970 as part of Xerox Research, then incorporated in 2002 as an independent, advanced R&D organization, PARC is celebrated for such innovations as laser printing, distributed computing and Ethernet, the graphical user interface (GUI), object-oriented programming, and ubiquitous computing. PARC is a wholly owned subsidiary of Xerox Corporation.

About Powerset, Inc. Powerset is a San Francisco company building a transformative consumer search engine. Powerset's unique innovations in search are rooted in breakthrough technologies that take advantage of the structure and nuances of natural language. Using these advanced techniques, Powerset is building a large-scale search engine that breaks the confines of keyword search, enabling people to express their intent powerfully and naturally in ordinary language. By making search more effective and intuitive, Powerset is fundamentally changing how we search the web. Visit us at www.powerset.com.